Uranium prices have been on the lower end for some time now. Although nuclear power is the most reliable source of power and has the power to help us transition from fossil fuel to clean, renewable power, the mineral’s market performance has been lagging.
The three major nuclear power plant accidents at the Three Mile Island in the United States, Chernobyl in the Ukraine and Japan’s Fukushima plant haven’t helped either, portraying uranium as a dangerous energy source rather than the reliable provider of clean electricity that it could be. In reality, nuclear power is one of the safest energy sources on the planet, and it could be used in concert with solar, wind and hydroelectric energy to complement their intermittent flows.
However, uranium prices could be poised for a revival once demand picks up and buyers come knocking again. Uranium mine owners and fund managers are waiting for uranium users to deplete their supplies before coming back for more.
After years of not acknowledging the immense potential of uranium to reliably produce electricity, governments around the world are now turning to nuclear energy amid global efforts to switch to clean energy. Since uranium barely contributes to carbon pollution, which has played a major role in heating up the planet, every country from China, Britain, France and the U.S. is now venturing into nuclear power production. These countries have made or are currently drafting initial plans to decommission old nuclear reactors as well as approving plans to build new reactors.
The surge in uranium prices could also be driven by the re-entry of nuclear power utilities. For instance, Canadian uranium company Cameco Corporation, which is the largest publicly traded uranium firm in the world, is said to be negotiating new contracts. In addition, financial services agencies Canaccord Genuity and Shaw and Partners both have positive projections for uranium prices, despite not specifically stating when this upturn will begin.
However, according to a recent report published by Shaw and Partners, factors such as supply side discipline, aging mines and long-term contracts in China, and Europe’s plans to reclassify uranium as a green fuel will be partly responsible for the price increase.
Canaccord stated that at the moment, uranium prices aren’t high enough to push mine owners to open their mines and begin supply. On the other hand, demand for uranium is strong as governments commit to nuclear power as an alternative to fossil fuels. Sprott Physical Uranium Trust, which currently has $2.4 billion in cash reserves, will most likely send major waves in the uranium market when it lists on NYSE later this year, which waves could cause ripples that buoy the stocks of extraction companies such as Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR).
NOTE TO INVESTORS: The latest news and updates relating to Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) are available in the company’s newsroom at http://ibn.fm/UUUU
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